Financial Independence
"Your economic security does not lie in your job; it lies in your own power to produce - to think, to learn, to create, to adapt. That’s true financial independence. It’s not having wealth; it’s having the power to produce wealth." – Stephen Covey
Introduction - Do You want to know What Does FINANCIAL INDEPENDENCE actually means and how can you achieve it ? Then , in that case this blog is especially designed for you by keeping in mind your environment surroundings.
Definition - Financial independence is the status of having enough income to pay one's living expenses for the rest of one's life without having to be employed or dependent on others. Income earned without having to work a job is commonly referred to as passive income.
Achieving financial freedom is a goal for many people. It generally means having enough savings, investments, and cash on hand to afford the lifestyle we want for ourselves and our families—and a growing nest egg that will allow us to retire or pursue the career we want without being driven by earning a certain amount each year.
Now , we will talk about how much money is required to become Financially Independent in India if you belong to a Upper Middle Class family . So look at some basic maths -:
Assume You have an average monthly expense of 150,000 assume inflation of 6-7%per year .
Then Money required to become Financially Independent for rest of your life is Rs. 3.5 Crore or 35 Million .
If You withdraw 150,000 every month from your bank account then it becomes -:
150,000 ×12 ×10 = 18,000,000 (18Million - 1.8 Crore)
And by investing rest of money in the stock of Country's reputed Fortune 500 companies then it become 10,21,24,904 means 10 Crore in 10 years with the effect of compound interest. That's why it's called 8th wonder of the world . 😀
(23,000,000 Principal Amount) × (15% Compound Interest) × (10 Years) = 10,21,24, 904. Interesting ! Right .
So , if you have 3.5 crores liquid funds and you have some basic financial knowledge then you can become financially independent after reading this full article .
Distributing 3.5 crores in two categories
1st is Expenses & 2nd is investing .
You need approximately 1.8 crores in your liquid funds to carry your monthly 1.5 lakh expenses for 10 years and by investing rest of 2.3 crores in investments like Sensex 30 or Nifty 50 . Then your investment become 10 crores in a span of 10 years explained above .
Now the question come is it safe to invest ?
Then Absolutely Safe . On an average the Indian stock market gives an annually minimum 15% Returns from the time it born . It can be more also . But thinking Practically you are not bounded to invest in share market but in any field that gives you at least a return of 15% P.A.
For Example A house Costing 1 Crore is rented on 1.25 lakh per month then it gives you 15 lakh P.A. which is a return of 15% . I hope you get the point which we're trying to explain . Now come back to basic maths -:
Now you can withdraw 3 crores for your expenses for 10 years (including inflation) and invest remaining 7 crores and after this cycle completes it become - 213,189,041.50 INR . Stay in this loop and enjoy financial Independence .
Now , from this article you got an idea that how can you create your financial Independence according to your needs , expenses and revenue . We hope this article help you .
Thanks For Reading .
“Money is a terrible master but an excellent servant.” – PT Barnum
